DOING BUSINESS 2009 - JOHN J. HADDAD, Ph.D.

62 Doing Business 2009Alternatively, the business may choose todisregard some burdensome procedures.For both reasons the time delays reportedin Doing Business 2009 could differfrom the perceptions of entrepreneursreported in the World Bank EnterpriseSurveys or other perception surveys.Changes in what is measuredThe methodology for one of the DoingBusiness topics—getting credit—improvedthis year. Three main changeswere made, affecting only the strength oflegal rights index. First, a standardizedcase scenario with specific assumptionswas introduced to bring this indicatorinto line with other Doing Business indicators.Second, the indicator now focusesnot on tangible movable collateral, suchas equipment, but on revolving movablecollateral, such as accounts receivableand inventory. Third, the indicator nolonger considers whether managementremains in place during a reorganizationprocedure, better accommodatingeconomies that adopt reorganizationprocedures similar to Chapter 11 reorganizationor redressement procedures incivil law systems.Economy characteristicsGross national income (GNI)per capitaDoing Business 2009 reports 2007income per capita as published inthe World Bank’s World DevelopmentIndicators 2008. Income iscalculated using the Atlas method(current US$). For cost indicatorsexpressed as a percentage of incomeper capita, 2007 GNI in local currencyunits is used as the denominator.GNI data were not available fromthe World Bank for The Bahamas,Bahrain, Puerto Rico, Qatar and theUnited Arab Emirates. In these casesGDP or GNP per capita data andgrowth rates from the InternationalMonetary Fund’s World EconomicOutlook database, the Economist IntelligenceUnit 2008 country profilesData challenges and revisionsMost laws and regulations underlying theDoing Business data are available on theDoing Business website at http://www.doingbusiness.org. All the sample surveysand the details underlying the indicatorsare also published on the website.Questions on the methodology and challengesto data can be submitted throughthe website’s “Ask a Question” function athttp://www.doingbusiness.org.Doing Business publishes 8,900indicators each year. To create these indicators,the team measures more than52,000 data points, each of which ismade available on the Doing Businesswebsite. Data time series for each indicatorand economy are available on thewebsite, beginning with the first yearthe indicator or economy was includedin the report. To provide a comparabletime series for research, the data set isback-calculated to adjust for changesin methodology and any revisions indata due to corrections. The website alsomakes available all original data setsused for background papers. The correctionrate between Doing Business 2008and Doing Business 2009 was 6%.and the U.S. State Department 2008country profiles were used.Region and income groupDoing Business uses the World Bankregional and income group classifications,available at http://www.worldbank.org/data/countryclass.Throughout the report the term richeconomies refers to the high-incomegroup, middle-income economies tothe upper-middle-income group andpoor economies to the lower-middleincomeand low-income groups.PopulationDoing Business 2009 reports midyear2007 population statistics as publishedin World Development Indicators2008.Starting a businessDoing Business records all proceduresthat are officially required for an entrepreneurto start up and formally operate anindustrial or commercial business. Theseinclude obtaining all necessary licensesand permits and completing any requirednotifications, verifications or inscriptionsfor the company and employees with relevantauthorities (table 12.2).After a study of laws, regulationsand publicly available information onbusiness entry, a detailed list of proceduresis developed, along with the timeand cost of complying with each procedureunder normal circumstances andthe paid-in minimum capital requirements.Subsequently, local incorporationlawyers and government officialscomplete and verify the data.Information is also collected on thesequence in which procedures are tobe completed and whether proceduresmay be carried out simultaneously. It isassumed that any required informationis readily available and that all agenciesinvolved in the start-up process functionwithout corruption. If answers by localexperts differ, inquiries continue untilthe data are reconciled.To make the data comparable acrosseconomies, several assumptions about thebusiness and the procedures are used.Assumptions about the businessThe business:• Is a limited liability company. If thereis more than one type of limitedliability company in the economy, thelimited liability form most popularamong domestic firms is chosen.Information on the most popularform is obtained from incorporationlawyers or the statistical office.• Operates in the economy’s largestbusiness city.• Is 100% domestically owned and has5 owners, none of whom is a legalentity.• Has start-up capital of 10 timesincome per capita at the end of 2007,paid in cash.(c) The International Bank for Reconstruction and Development / The World Bank